BY ON MARCH 20, 2018
Excerpt Front Page Confidential
Once the toast of the tech world and formerly valued at an estimated $9 billion, Theranos is now a byword for the industry’s “fake it till you make it” culture. With Theranos’s laboratories shuttered and its claims of revolutionary blood-analysis technology exposed as nothing more than hype, the U.S. Securities and Exchange Commission (SEC) dropped what might be the final bomb on March 14, charging Theranos, its charismatic founder and CEO Elizabeth Holmes, and its former president Ramesh “Sunny” Balwani with an “elaborate, years-long fraud,” during which the company raised $700 million from credulous investors.U.S. Sen. John McCain received thousands of dollars in contributions from executives at the Silicon Valley healthcare-technology company Theranos. In a symbiotic relationship reminiscent of his involvement in the Keating Five scandal of the late 1980s, the Arizona Republican played cheerleader for the venture online and supported a change in Arizona law to give the company unfettered access to the state’s consumers.
Once the toast of the tech world and formerly valued at an estimated $9 billion, Theranos is now a byword for the industry’s “fake it till you make it” culture. With Theranos’s laboratories shuttered and its claims of revolutionary blood-analysis technology exposed as nothing more than hype, the U.S. Securities and Exchange Commission (SEC) dropped what might be the final bomb on March 14, charging Theranos, its charismatic founder and CEO Elizabeth Holmes, and its former president Ramesh “Sunny” Balwani with an “elaborate, years-long fraud,” during which the company raised $700 million from credulous investors.U.S. Sen. John McCain received thousands of dollars in contributions from executives at the Silicon Valley healthcare-technology company Theranos. In a symbiotic relationship reminiscent of his involvement in the Keating Five scandal of the late 1980s, the Arizona Republican played cheerleader for the venture online and supported a change in Arizona law to give the company unfettered access to the state’s consumers.
Good to see @theranos Founder & CEO Elizabeth
Holmes today - remarkable young innovator, glad she's doing biz in #AZ!
In a press release
announcing the federal charges against the company, the SEC alleged
that Theranos’ proprietary blood analyzer — which Holmes dubbed “Edison” —
“could complete only a small number of tests,” and that the vast majority of
blood analysis was actually carried out using “modified and industry standard
commercial analyzers manufactured by others.”
Company execs also
made false claims that Theranos technology was used on battlefields in
Afghanistan and widely misrepresented the amount of revenue the company
was generating, according to the commission.
Holmes and Theranos
agreed to settle the fraud charges without admitting or denying the SEC’s
charges. Holmes has promised to pay a $500,000 fine and relinquish her majority
voting shares in the company.
Holmes, whom the
media hailed as “the next Steve Jobs” and the world’s “youngest self-made woman
billionaire,” now has a net worth of “nothing,”according to Forbes. Her
settlement with the SEC bars her from serving as the officer or director of a
public company for the next decade. (Balwani did not settle with the SEC, which
will continue to litigate its claims against the ex-Theranos president.)
Proud to support bill signed
today to expand @theranos in #Arizona & provide
cost-effective, quality healthcare for entire state
McCain, who in 2015
served as a tireless booster for Holmes and Theranos, has been mum on the
company’s ignominious slide. The senator is fighting an aggressive form of
brain cancer and has not been back to Washington, D.C., since returning home to
his Sedona ranch in December. His office did not immediately return phone calls
and emails from Front Page Confidentialseeking comment.
According to filings
with the Federal Elections Commission, between October 2015 and June 2016,
McCain’s re-election committee, the Friends of John McCain, accepted a total of
$15,000 in campaign contributions from Theranos bigwigs, including general
counsel Heather King, president and chief operating officer Ramesh “Sunny”
Balwani, and vice president of communications Brooke Buchanan.
Buchanan, McCain’s former press secretary, left Theranos in 2016 to become
a top flack for the Whole Foods grocery chain, which has since
been acquired by Amazon.
During much of 2015,
McCain championed Theranos and Holmes on Twitter, praising Holmes as a
“remarkable young innovator” and posting photos of the two together, sometimes
deep in conversation. Holmes participated in that year’s Sedona Forum, the
exclusive, invitation-only event sponsored by the McCain Institute for
International Leadership, at which billionaires, generals, and
foreign dignitaries gather annually to hobnob and discuss world affairs at the
Enchantment Resort against the backdrop of the location’s stunning red rock
formations.
Despite his precarious
health, McCain has some ‘splainin’ to do.
Editor’s note: Front Page Confidential writer Stephen Lemons is finishing his forthcoming e-book, The Stains of John McCain. To sign up for a free copy, click the link below:“Coming in March: The Stains of John McCain“
